Never Sans Sheriff: Consolidating Power in Transdniestria

Former president Yevgeny Shevchuk’s flight from Tiraspol may signal the culmination of Sheriff’s consolidation of power in Transdniestria, giving the country’s leaders a chance to devise a strategic development program for the first time in twenty years.

Former Transdniestrian president Yevgeny Shevchuk piqued international interest in June, when he fled from Tiraspol to Chisinau in order to avoid prosecution by his successor, Vadim Krasnoselsky. A question immediately arose: did Shevchuk’s flight point to the escalation of an ongoing political struggle within Transdniestria, or just the opposite—the concentration of power in the hands of the country’s monopolists?

To understand current political trends in Transdniestria, it’s important to look back on how the existing system emerged. At the beginning of the 1990s, Igor Smirnov, Transdniestria’s first president, began to form a cult of personality. A charismatic leader, Smirnov was able to build a power structure that survived Transdniestria’s war for recognition, a deep economic crisis, and competition with Russian army commander Alexander Lebed for control over the country.

Smirnov didn’t build political parties or even have a prime minister; instead, he chose to lean on loyal “independent deputies” in parliament for support. Smirnov ruled until the end of 2011, when the Kremlin finally got fed up with his refusal to pay for Russian gas and his decision to sever diplomatic talks with Moldova. Sergey Naryshkin, the head of the Russian presidential administration at the time, publicly advised Smirnov not to run for reelection, and Kremlin-controlled NTV aired a documentary alleging that Smirnov had tried to steal Russian humanitarian aid. As a result, Smirnov won only 25 percent of the vote in the December 2011 election, failing to even advance to the second round.

A second layer of the Transdniestrian elite formed in parallel during the 1990s in connection with Sheriff, a powerful holding company whose business empire has grown to employ tens of thousands of people and includes the most profitable segments of the Transdniestrian economy—legal and illegal.

Sheriff entered politics on the eve of the 2000 parliamentary elections, in which the company’s party, Renewal, won seven out of 43 seats. In the next elections, held in 2005, the party campaigned under the direction of Shevchuk, the former deputy director of Sheriff LLC, and won a parliamentary majority.

Although at first it seemed Renewal had been able to find common ground with Smirnov, the relationship became tense in 2009, when the president and parliament began to fight over the scope of their respective constitutional powers. Shevchuk, then speaker of the Supreme Council, became Igor Smirnov’s fiercest opponent in this struggle.

Ultimately, Smirnov and the Sheriff leadership were able to come to an agreement, with Shevchuk becoming the victim of the compromise. In 2009, he announced that he would step down from his position as speaker, and he was removed from Renewal’s leadership at the party’s convention the following year.

Having been rejected by both of Transdniestria’s power centers, Shevchuk ran as an independent in the 2011 elections. His base consisted of the “protest electorate”—people who were tired of the economic stagnation of the Smirnov period—as well as small and medium business owners who opposed Sheriff’s monopoly on so many sectors of the economy.

Moscow, having organized Smirnov’s departure, didn’t have a dog in the fight to be his successor: though Anatoly Kaminsky, Shevchuk’s Sheriff-backed opponent, was able to garner support from the Russian political elite, Shevchuk ultimately prevailed.

Shevchuk did not live up to expectations, however. In 2013, he made the sudden decision to dramatically increase prices on gas. These increases, combined with a sluggish economy, forced some businesses to stop operations, including the flagship business of the Transdniestrian economy, Moldova Steel Works. During Shevchuk’s reign, less and less cash flowed into the country, leaving the state budget diminished and social issues unaddressed.

Shevchuk became increasingly in conflict with Sheriff over the course of his tenure. After another Renewal victory during the 2015 parliamentary elections, this struggle turned public: the president, parliament, and Sheriff spent most of 2016 levying accusations at each other. By the time the presidential election rolled around, Shevchuk had no resources left to maintain his hold on power, and the speaker of parliament, Vadim Krasnoselsky, won the presidency. As a representative of Renewal, he had incomparably greater financial resources at his disposal.

With Krasnoselsky’s victory, Transdniestria came completely under Sheriff’s control.

On one hand, the consolidation of power by a single commercial entity is unlikely to have a positive effect on democratic institutions and the rule of law in Transdniestria. And the Shevchuk case may become an example of how political life is becoming more restricted in Transdniestria. If this were the case, the authorities would inevitably be tempted to continue relying on Russian financial, organizational, and political support, and neglect necessary domestic change.

On the other hand, Sheriff’s consolidation of power gives Transdniestria’s rulers a chance to devise a strategic development program for the unrecognized republic, something it hasn’t had for the last twenty years. The country’s manufacturing has all but disappeared, leading to a reduction in state revenue and the passage of a special gas bill according to which taxes are derived from the administration’s sale of essentially free Russian gas to their own businesses and citizens. This kind of arrangement is dangerous in a country in which there is a one-to-one ratio between workers and pensioners, and every second person works in the public sector.

On July 6, at the Transdniestrian International Economic Forum, local bureaucrats called attention to these problems. A plan was developed to lower the tax burden for businesses to 26 percent, liquidate administrative barriers to entrepreneurship, and reform governmental organization (based on a report conducted by Russian companies). But there is no long-term strategic plan behind these proposals, no vision for the future.

Transdniestria now finds itself in a difficult situation. The economy is worsening, relations with Moldova and Ukraine are deteriorating as Chisinau and Kiev drift away from Moscow, and Russia is no longer able to increase its aid to Tiraspol. Under such conditions, Transdniestria will be able to maintain its statehood only if it begins to harness its domestic resources. Tiraspol, in short, needs a new approach.